Greece passes reforms; EM investors stay cautious; Goldwind, China Minsheng give guidance

By Christine Van Dusen

Atlanta, July 16 – Xinjiang Goldwind Science & Technology Co. Ltd. and China Minsheng Investment Corp. Ltd. gave guidance for new deals on a Thursday that saw Greece pass strict reforms and the European Central Bank agree to provide more emergency funds. Additionally, euro zone leaders said they would loan Greece €7 billion to keep the debt-saddled sovereign’s finances going until a new bailout is approved.

“In light of the deal, we think that the risks of a [Greek exit from the euro] have declined,” according to a report from Barclays Capital. “Against this backdrop, the IMF published an updated assessment of its debt sustainability analysis for Greece, asserting that the country can obtain debt sustainability only through extensive debt relief ‘far beyond what Europe has been willing to consider so far.’”

Meanwhile, the tone for Asian bond trading felt “cautious, as new issues are either coming with a good concession or coming tight and ending up trading wider than reoffer,” a London-based trader said, noting that Korea Gas’ new issue was wider by 1 basis point.

China-based Tianjin Binhai New Area Construction & Investment Group Co. Ltd.’s new issue – a two-tranche $800 million deal with notes due 2018 and 2025 – initially traded wider by 15 bps, he said.

The deal included $300 million 3.1% notes due in 2018 that priced at 99.411 to yield Treasuries plus 225 bps. Those notes finished the day at 253 bps bid, 248 bps offered.

The $500 million 4.126% notes due in 2025 that priced at 99.436 to yield Treasuries plus 245 bps traded Thursday at 273 bps bid, 268 bps offered.

“Recovered into the day end,” he said.

At the end of Thursday’s session, high-yield bonds from Chinese property companies saw some sellers, he said, while investment-grade corporates tightened by about 1 bp to 2 bps.

Ukraine, Russia tensions grow

From Ukraine, tensions escalated on news that pro-Russian rebels were attacking government troops, according to a report from Schildershoven Finance BV.

“Eight Ukrainian soldiers were killed and 16 were wounded, while only two people were killed and four wounded on the rebels’ side,” the report said. “Fighting in Ukraine has subsided since the truce was signed in Minsk. At the same time, the cease-fire remains fragile amid tensions over the implementation of the agreements and accusations from both sides that the other is breaching the deal.”

All of this news is negative for Russia’s bonds, the report said.

“It increases the probability of the military conflict accelerating,” the report said. "The situation in the region continues to be volatile.”

Kazakhstan 2025s tighten

Another new issue saw some activity on Thursday. One tranche of Kazakhstan’s two-tranche issue of $4 billion notes due in 2025 and 2045 that came to the market Tuesday saw some spread tightening, a trader said.

The 5 1/8% notes due in 2025 that priced at Treasuries plus 285 bps tightened by 9 bps and traded above par, he said.

Citigroup, JPMorgan, Kazkommerts Securities and Halyk Finance were the bookrunners for the Rule 144A and Regulation S deal.

Brazil most active

Latin American bonds continued to firm up on Thursday afternoon, with better performance from Braskem SA’s curve after recent weakness related to slow growth in Brazil, currency weakness and the oil sell-off, a New York-based trader said.

“They still have a ways to go, but they’ve made a nice move, and we’re no longer seeing sellers, as was the case two to three weeks ago," he said.

High-grade bonds from Mexico moved higher, he said, and high-grade names from Chile were firmer.

“The Cencosud SA curve, which had been feeling pressure, is now firming back up,” he said. “But not the 2045s – they continue to trade away from the shorter bonds. There has been very little demand there the past three months.”

Goldwind gives guidance

China-based wind turbine manufacturer Xinjiang Goldwind Science & Technology set initial talk in the Treasuries plus 180 bps area for a three-year issue of dollar-denominated green bonds, a market source said.

Bank of China, Deutsche Bank and Societe Generale are the bookrunners for the Regulation S deal.

The proceeds will be used for general corporate purposes, for working capital purposes and to on-lend to any companies controlled by the group.

“We see fair value for the new 2018s at Treasuries plus 162.5 bps, implying minimal upside after final tightening,” a trader said.

Minsheng Investment sets talk

China Minsheng Investment set talk in the Treasuries plus 190 bps area for up to $300 million of notes due in five years, a market source said.

ABC International, China Construction Bank, UBS, AMTD Asset Management, Citigroup, HSBC and Standard Chartered are the bookrunners for the Regulation S deal.

“We see fair value at Treasuries plus 172.5 bps,” a trader said. “[China Minsheng Investment] is not supported by a state entity. However, this is balanced to some extent by the issue’s small size.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.